The 23-year-old, who is thought to be a top target for the Gunners, is believed to have been given permission to go out on loan this summer by the Spanish champions.

While Arsenal are thought to be interested in a permanent deal, it is understood that Liverpool boss Brendan Rodgers has a good relationship with Real manager Jose Mourinho and is willing to accept a loan move or a transfer with a buy-out clause, according to The Express.